Tax Evasion and Economic Growth: Empirical Investigation in Sub-Saharan Africa | Chapter 07 | Emerging Issues and Development in Economics and Trade Vol. 3
Tax is the income which is paid to the
government in order to fulfill the need of the public. However tax evasion is
the act of not paying the tax by use of illegal ways. Allingham and Sandmo
being the first researchers studying the tax evasion found a relationship of
tax evasion with low penalty fees and a low detection. The tax evasion
basically is affected by various factors but it also affects many economic
factors. Sub Saharan Africa being a developing region is facing the phenomenon
of tax evasion in a crucial way. This study measures the impact of the tax
evasion on the Gross Domestic Product (GDP) per capita of Sub Saharan Africa.
The relationship between the GDP per capita and tax evasion is tested using the
generalized least squared whereby it is found that there is a positive impact
of tax evasion on the GDP per capita however the p-value states that the tax
evasion is insignificant and is not an important component for the
determination of the GDP per capita. Moreover in the presence of tax evasion,
this study shows that GDP per capita has also a negative relationship with the
Foreign Direct Investment (FDI), positive relationship the Gross Domestic Fixed
Capital Formation (GDFCF), a favorable connection with the export, a negative
relationship with the import, a positive impact on the inflation and a negative
relationship with the government expenditure. To fight against tax evasion for
the economic benefit of Sub Saharan Africa, it is advised to review the tax
system, to implement strict and severe penalties and very high fines for tax
evaders. Moreover, the tax authorities of Sub Saharan Africa need to appoint
more experts in auditing department to be able to detect the non-compliance tax
payers easily and rapidly.
Author(s) Details
B. Jugurnath
Department of Accounting and
Finance, Faculty of Law and Management, University of Mauritius, Réduit 80837,
Mauritius.
B. Aumeerun
Department of Accounting and
Finance, Faculty of Law and Management, University of Mauritius, Réduit 80837,
Mauritius.
H. Soondram
Department of Accounting and
Finance, Faculty of Law and Management, University of Mauritius, Réduit 80837,
Mauritius.
View Book: http://bp.bookpi.org/index.php/bpi/catalog/book/120
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